The Impact of Management by Objectives (MBO) on Employee Satisfaction and Performance Appraisal: An Analysis Using Structural Equation Modeling (SEM)

Abstract

This study explores the impact of the Management by Objectives (MBO) method as a performance appraisal tool on employee satisfaction. By employing Structural Equation Modeling (SEM), we examine the relationships between various components of the MBO approach and their influence on employee satisfaction and effectiveness. The results emphasize the crucial role that different MBO components play in enhancing employee performance and contentment. The study reveals both direct and indirect connections between MBO factors and employee satisfaction and effectiveness. The significance of this research lies in providing valuable insights for organizations aiming to improve performance management practices and foster a more satisfied and productive workforce. It contributes to the existing body of knowledge on performance appraisal and offers practical implications for HR practitioners and organizational leaders. However, the study has limitations, such as its focus on a specific organizational context. Future research could investigate additional factors affecting employee satisfaction and productivity across diverse industries and cultural settings. This study highlights the importance of the MBO method in driving employee satisfaction and productivity and serves as a foundation for future research and organizational development efforts in the dynamic field of performance management.